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QMed, Inc. Comments on Estimated 3rd Quarter Results & Medical Expense Ratio; Sets 2008 Revenue Guidance for Medicare SNPs at $88-95 Million

EATONTOWN, N.J., Sept. 27 /PRNewswire-FirstCall/ -- QMed, Inc., (Nasdaq: QMED) today announced it expects to report for the three and nine months ending August 31, 2007 revenue of approximately $10.8 million and $26.6 million and a net loss of approximately $9.2 and $13 million respectively. The Company's cash position as of August 31st, 2007 is approximately $6.4 million net of statutory reserves.

Jane Murray, president and CEO, said, "During the months of July and August, we experienced an unusual spike in the payment of medical claims related to services from prior months. As a result, we will report an increase in our incurred but not reported or paid claims liability (IBNR) for the third quarter ended August 31, 2007. This IBNR estimate will represent approximately 30% of total medical expenses for the nine months ended August 31, 2007 resulting in an MER (medical expense ratio) of approximately 114%. Given both our limited claims history, and the trending of costs that results from a continuous enrollment ramp which is very different from standard Medicare Advantage plans, the implications of these payments on our MER cannot be determined with certainty until we achieve a high completion rate which we estimate will be in December 2007.

"Our more than 12 years experience with Medicare chronics provides critical perspective on these costs. The experience shows that adding to patients' length of time in the program (LOTIP) uniformly has produced strong and beneficial effects on both patient health and costs. This is primarily because it takes time for physician-delivered best practice treatment plans to produce a beneficial population result. Given that, a large majority of our membership enrolled in 2007 we expect both to gain the benefit of LOTIP and simultaneously experience increases in per member per month premiums in 2008 as we continue to submit appropriate risk factor data to CMS through our proprietary systems. We experienced just such a premium increase in 2007 for our 2006 members.

"Finally, we currently expect that in 2008 our Special Needs Plans will produce revenues of between $88,000,000 and $95,000,000. We base this guidance on several factors:

-- Our current revenue run rate, now at $44 million, coupled with probable

increases in reimbursement.

-- A nearly 80% expansion of Medicare beneficiaries who are eligible for

our plans in both states as a result of recent approvals for our five

SNPs for 2008.

-- Continued expansion of both our medical provider and insurance broker

networks, especially in New Jersey, underlying a positive outlook on

the open marketing period that extends from October through December.

-- Increasing awareness with our programs in New Jersey among agents,

physicians and existing members.

"We are clearly planning for vigorous growth in 2008 and beyond. We are confident that our experience managing chronically ill beneficiaries in Medicare demonstrations as well as in Medicare health plans has shown that we have the ability to manage this growth successfully," she concluded.

Financial results for the third quarter of 2007 will be available on Monday, October 8, 2007 at 4:00 p.m. Following the release, the Company will hold its quarterly conference call at 5:00 p.m. Eastern time. Investors will have the opportunity to listen to the conference call by dialing 877-356-9649, conference ID: 18623908 at least 5 minutes prior. A replay will be available two hours after the call's completion for 30 days by dialing 800-642-1687, and using the same ID code, and the replay will also be available on the Company's Web site at

About QMed, Inc.

QMed provides evidence-based clinical information management systems around the country to its health plan customers. The system incorporates Disease Management services to patients and decision support to physicians. The Company's QMedCare subsidiary specializes in serving high-risk populations of Medicare beneficiaries. The Company also operates a Medicare Demonstration to test the feasibility of reimbursing its care coordinated DM services in the vast Medicare fee-for-service program. More information on QMed, Inc. can be obtained at, by calling (732) 544-5544 or by emailing

Except for historical information contained herein, matters discussed in this news release are forward-looking statements that involve risks and uncertainties. They include but are not limited to those relating to the timely implementation of programs, the impact of competitive product introductions, acceptance and pricing, and those risks detailed in the Company's filings with the Securities and Exchange Commission (SEC). Actual results may differ materially from any forward-looking statements due to these risks and uncertainties.

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